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The sense of progress in the computer industry is so strong that it feels almost inevitable. That momentum may be most obvious in the increasing capabilities of the underlying technology – faster chips, cheaper storage, and more bandwidth, but there is another dimension of that progress that has become increasingly clear over the last thirty years. The basis of competition in the industry keeps changing, and it appears to change in ways that make the key differentiators between providers ever more relevant to users.

In the early days, the central value proposition in the computer business was hardware. Later, it shifted to systems software, then applications software, and then networks. As more software functionality was delivered to a browser over the internet, the basis of competition shifted from features to service level metrics like reliability, accessibility and security. I believe that today, at least in the area of consumer web services, we have already moved on to a new focus of competitive differentiation based on data.

The web services that seem to explode onto the scene like Facebook and YouTube did not get there by providing exceptional reliability, accessibility or security. In fact many have suffered outages that would have killed other service providers. These services succeeded because they effectively gather and use data. They are differentiated not by the quality of their service but by its nature. Competitors can offer much better service levels but without access to the same data, they can not offer the same utility.

No one really cares about the hardware, software, or network that Craigslist uses to deliver its posts. Craigslist’s users expect a basic level of service, but don’t judge the service on its uptime or speed. Just as they assume that the PC they buy today will have enough storage, they expect Craigslist to be available and reasonably snappy. The basis of competition has shifted from how the service is delivered to what service is delivered. What services are delivered depends entirely on the data.

This progression from hardware to systems software to applications software, to network, to service, and now to data has such a compelling momentum that leads inexorably to the question – What’s next?

One way to look at that question is to argue that we have arrived at the end of history. The progression to date has been up the stack in a classic architecture diagram, data is on top of that stack, and nothing sits on top of the data. I disagree.

The genius of Craigslist is in its governance system. It is its lightweight governance system that allows 21 people to administer 300 sites in 35 countries. I believe that the basis of competition in web services will shift from the data to the system that manages the acquisition, and use of that data. The governance system that yields the most utility for the largest number of users with the least overhead will ultimately manage the largest communities with the most valuable data.

Is there a basis for competition beyond the governance systems underlying these services? If pressed, I would guess it will be values. It might be possible for two equally effective governance systems to compete by internalizing different values. One could perhaps embrace openness and diversity at the cost of some efficiency and the other could be optimized for efficiency for a more homogeneous set of users and interests. After that maybe they will compete on aesthetics or maybe there is no more “stuff on top” as Nicolas Carr once said to me. Maybe then we really are talking about the end of IT history. What do you think?
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